A report by Wall Street bank Goldman Sachs said esports has gone from the “wild west to the mainstream”.
Last year it drew in an estimated global audience of 443mln, which is expected to grow to 646mln by 2023.
The appeal of competitive duelling on platforms such as League of Legends, Dota, Rocket League, Fortnite, and Counter-Strike means esports’ popularity has already surpassed that of basketball, ice hockey and baseball.
It still lags well behind the undisputed king of sports – Premier League football – which is broadcast to 643mln homes and has an estimated 4.7bn global audience.
Unlike the Premier League, esports doesn’t have overheads such as super-expensive playing staff, coaches and stadia.
And it has a fan base whose commercial potential remains relatively untapped.
Currently, esports followers generate revenues of around £4 per head, which lags traditional sports at between £28-£68.
But growing at a compound rate of 15% per year 2016-19, esports is closing that gap.
And as the industry develops, we are seeing Barcelona and Manchester United lookalikes emerging from esports.
Team SoloMid is worth more than £300mln, as is Cloud 9, according to the business magazine Forbes, which estimates there are 11 esports organisations worth more than £100mln.
Fundamentals such as these should provide the perfect long-term growth drivers for Guild Esports PLC (LON:GILD), which earlier this month floated here in London with a market capitalisation of just over £41mln, raising £20mln in the process.
Premier League academy model
Guild has recruited David Beckham, the former England football captain to be its public face. He brings kudos but also holds a near 5% stake.
With strong support from Beckham, Guild is hoping to recreate the Premier League academy model in esports to hothouse talent.
The Manchester United and Real Madrid legend will use his first-hand knowledge of the system to adapt it for the latest generation of gamers, providing coaches and mentors for players joining the new set-up.
This will be a big differentiator compared with what has gone before.
In its initial public offering (IPO) prospectus Guild said it wants to create an “iconic brand akin to that of a Premier League football team or a US NFL team”. It also plans to develop merchandise and monetise its content.
In the next 12 months, it expects to grow its player roster to 19 and its fan base to 1mln. Financially, analysts predict it will generate £5mln in sponsorship revenue, £1mln from merchandise and £600,000 from media.
Hits the ground running
Guild hit the ground running last week when it announced a three-year, £3.6mln sponsorship deal with an unnamed fintech.
One of its key aims, as it grows, is to acquire brands and teams – and it delivered this in a big way by recruiting a top-tier squad competing in Valorant, a five-versus-five multiplayer tactical shooter produced by Riot Games.
The Swedish players, who previously competed under the name Bonk, will join Guild’s existing teams duking it out in Rocket League and FIFA.
“We’re betting big on this [Valorant]. We’ve signed a top team in Europe to be our starting five and we really can’t wait to have them competing next month but the first big tournament,” Guild chairman Carleton Curtis told Proactive.
“When it comes to other games our perspective has been very clear for over a month now that we also want to get into Fortnite and Counter-Strike. Those are both very big games with very big audiences and awesome communities in eSports.
“We are aggressively looking at fielding those teams; likely over the next quarter. So, we really couldn’t be more excited about what’s next in our esports portfolio.”
Experienced team, blue-chip investors
Curtis leads an experienced management roster and knows his way around the industry having been vice president of programming at market leader Activision Blizzard.
That made him responsible for the global strategy of Overwatch League, Call of Duty League and Major League Gaming.
Fergus Purcell, best known for his work with skate and streetwear brand Palace, has been brought on board to develop the company’s branding.
And of course, there is the talismanic figure of Beckham, whose association with Guild mirrors the interest of Will Smith, Michael Jordan, Mike Tyson and Drake in the US.
Perhaps taking their cue from the glitterati, blue-chip investors such as Soros Fund Management (yes, George Soros) and Schroders have become holders of Guild post-float.
What they no doubt see is a sport still in its infancy in an industry just starting to find its commercial feet.
Zeus Capital in a note talks of the huge untapped potential of this new form of digital entertainment: “Esports viewership, prize money and followings are comparable to those of traditional sports, but revenue per viewer is still relatively low.
“We see revenue per viewer rising as investment, content quality, distribution and sponsorship all rise in a virtuous cycle.”